Volatility in cryptocurrencies is nothing new, and you should be prepared for it if you decide to invest.
According to Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet, volatility might be ascribed to a "immature market." A celebrity tweet or a new federal regulation can all send prices soaring.
“If Elon Musk puts hashtag Bitcoin in his Twitter bio, it sends Bitcoin up 10%,” says Leech.
Because of this uncertainty, investing professionals advise avoiding putting a large portion of your portfolio into a hazardous asset like cryptocurrency. Many experts advise keeping your cryptocurrency holdings to less than 5% of your whole portfolio.
Day-to-day volatility might be unsettling for inexperienced investors. Dips, on the other hand, are nothing to be concerned about if you've invested using a buy-and-hold approach, according to Humphrey Yang, the personal financial guru at Humphrey Talks. Yang suggests a straightforward solution: ignore your investment.
Don't worry about it. That's the best you can hope for. If you let your emotions to get the best of you, you may sell at the wrong time and make the incorrect judgment," Yang warns.
Many conventional long-term investors follow the traditional "set it and forget it" advice. You may have too much riding on your bitcoin investments if you can't get on board and the dramatic dips continue to bother you.
“The most important thing any investor can do, whether they are investing in Bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”
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